Non-market resource allocation and the public’s interpretation of need: an empirical investigation in the context of health care

The concept of need is central to the non-market allocation of many public resources, although the definition of need to serve as a basis for such resource allocation often remains contested. This study uses a discrete-choice experiment to investigate the general public’s interpretation of need in the context of health care resource allocation, focusing on three commonly cited definitions of need: need as a person’s baseline health status; need as a person’s ability-to-benefit; and need as the amount of resources required to exhaust a person’s ability-to-benefit. Analysis of participants’ need judgments using a latent-class, rank-ordered conditional logit model reveals that most individuals draw on all three definitions when assessing need, and that here is heterogeneity in interpretations of need among the public. Baseline health status is the most influential and consistent determinant of need, while ability-to-benefit and resources-required-to-exhaust-benefit are considered jointly. However, while some assign greater need to those who are worse off in the sense that they have little ability-to-benefit and require large amounts of resources to achieve that benefit, others assign greater need to those who have greater ability-to-benefit and whose benefit can be achieved with small amounts of resources. The public’s reasoning about need contrasts sharply in a number of ways with the types of arguments offered in the literature on needs-based resource allocation.